*Correspondence can be directed to
this author, as the primary contact.

Abstract

A sustainable
business
system should uphold a core value linkage between customer interests
and business
operations and their foundation in natural and human resource values.
However,
in many industrial economies, companies in the established business
systems,
all too frequently seek to obtain the natural and human resources at
lowest
short-term costs while paying little or no attention to the long-term
sustainability of the natural and human systems upon which their
sustainable
livelihood is dependent.

This paper
presents an innovation
approach with the objective to create higher market value for hard-wood
products and to increase system effectiveness by helping to enhance the
multiple uses of forests. One objective is to use the entire eco-system
and
product design as essential elements to bring more resources into the
forestry-based
business system. This should serve as a strong catalyst to build
greater
motivation for sustainable management of the entire system. The
resources are
used to support development of sustainable, diverse-species forests and
local,
regional and global businesses, and thus, help to develop an improved,
sustainable
forest system as an integral component of more sustainable regional
development. One part of the innovation system advancement is
opportunity based
learning in collaboration with entrepreneurial business developments.

The innovation system is
designed to
increase the supply chain efficiency and effectiveness and to promote
business
development of new forest-based products and services with higher added
value.
The mutual involvement of landowners, municipalities, enterprises and
customers
is needed to assure sustainability on social, biodiversity and business
levels.
The value enhancement has a basis in creation of company images and a
market
perception that more clearly highlights the valuable feeling of being
in
contact with the treasures of nature. One tool to highlight the
interconnections is storytelling. The innovation system has a
foundation of
expertise in established forest-based businesses. The
present development
phase is designed to support transformative innovations through
promotion of further
development of the forest-based business system to produce higher added
value
and to enable a more sustainable forestry and thus a more sustainable
society.

Introduction

Forests and timber based
businesses produce a
significant part of Sweden’s
balance of trade; that is 110 billon SEK
or 14% of Sweden’s
annual export value. The main timber based industries use spruce as a
base for
pulp, paper, and construction wood. For a number of decades, Sweden
has invested heavily in
development of the pulp and paper industries and the forestry research
has
focused on production of softwood for those industries, as indicted by
publications in Table 1. Most of the forestry research and development
have
been focused on Scots pine and Norway spruce.

The South part of Sweden
has had a large portion of
agricultural land. This region has had a considerable number of small
saw mills
and furniture producing companies. However, during recent decades,
there has
been a structural development so that the timber-based business system
is now dominated
by large softwood industries. Today, Southern Swedish forests are 79 %
soft-wood, and 19 % hardwood, see Table 1. A
considerable part of the forest land is
owed by small private land owners.

Table 1.Timbervolumes
and relative amounts of
research per tree species

Beech

Oak

Ash

other

Alder

Aspen

Birch

Spruce

Pine

Standing volume

2.0

3.2

<…….

3.9

…….>

1.9

9.9

49.4

29.7

Se. Publications

3.6

1.7

0.3

3.4

1.6

2.3

3,4

39,6

44.1

Int.
Publications

8.8

8.9

2.2

6.3

4.3

2.1

9.0

29.1

29.3

Row 1; Standing volume of timber, % by species
1998-2002,
in the South part of
Sweden,
(Götaland), other =
other broad-leaved (National board of
forestry, 2006)

Row 2 & 3; Research publications
1990-1999, % /species in Swedish
and in total in International scientifically related literature. (Löf, 2001)

The
Swedish Base of Forest
Related
Knowledge and Organizations

This paper focuses on an
innovation system approach
that is being used to mobilize and focus diverse kinds of forestry
related
knowledge through more explicit linkages to entrepreneurial and intrapreneurial business
developments. The goal is to
produce higher value added from hard- and soft-wood, as well as from
other
forest related products and services, in order to help make Southern
Swedish
forests and communities more sustainable. While we focus upon both hard
and soft-wood
related entrepreneurs; our special focus is upon the hard-wood chain
because
less systematic attention has been given to that part of the regional
development efforts.

Sweden has a recent history of a
multifaceted variety of forest and wood related knowledge and local
business
traditions. During the twentieth century a large part of the Swedish
research
and industrial investments were made within forest related subject
areas. The
forest related part of the SwedishUniversity
of Agricultural Sciences was started in 1914 and during more
recent decades,
Sweden
has been a development leader in pulp and paper technologies.

The
Swedish Society
for Nature Conservation was started in 1909 and in 1972 Stockholm,
Sweden
hosted
the first major United Nations Conference
on the Human Environment. Some examples that illustrate the
present
situation; VäxjöUniversity
has a research profile in Forest Industry
Production Systems. The Swedish
Governmental Agency for Innovation Systems has a priority
area in research
on Wood Manufacturing.

The WoodCenter
in Nässjö is promoting
market-oriented wood industry
development and renewal. The Broadleaf
Program at the Swedish University
of
Agricultural Sciences is a forest research project 2003- 2009
that focuses
on eight noble tree species Ulmusspp.,
Fraxinus excelsior, Carpinusbetulus, Fagussylvatica,
Quercusspp. Prunusavium,
Tiliacordata and Acer platanoides. Furthermore there
are numerous networks and
for example The Forestry Research
Institute of Sweden,
SKOGFORSK is
pursuing demand-driven applied
research and SP Trätek
is working as a collective research and development resource for the
Swedish
timber and wood manufacturing industries.

The
Innovation System Approach

Our new innovation
approach is
designed to lift the value level for the total forestry-products and
services supply
chain, by linking development of higher customer value to forest
developments.
It is a commercially based development approach designed to ensure a
more
sustainable forestry system and sustainable regional development. The ‘Innovation System for Sustainable Forestry’
(ISSF)
is designed to ensure higher market values for a
multifaceted variety of wood based products and forest
based services. ISSF is
designed to become a leading example in line with the UN objective to
change
consumption and production
patterns (The Marrakech Process,
2006). The primary focus is on
transformative, innovative business developments in collaboration with
life-long
educational initiatives.

The
most explicit goal is to
enable enhanced use of the best pieces of the timber, the fillets as
the Wernerträ manager
described them, see
also Wernerträ
Figure 5, to produce higher added value, and simultaneously to
coordinate this with
system optimization to enhance the utilization of all parts of all
kinds of
timber from many more species.

Another
aspect of the system is to improve the
utilization of bio-energy through logistic business system
optimization, to
make better use of more of the timber and other parts of the trees,
because
forestry based fuels are preferable from sustainability point of view. (Mills et. al. 1991 and
Sanden et. al. 2005) The overall, long-term
vision includes innovative business development by supporting the
societal
appreciation for not only the physical products they can derive from
forests
but also through appreciation other kinds of ‘nature’s services’ that
forests
provide such as provision of habitats for diverse species, air quality
improvement, water quality and quantity management and provision of
places for
human habitats and recreation.

A basic objective of ISSF
is to promote support to “Make the
winners”, in contrast
with the traditional financial venture capital funding system that
tends to
only try to “Pick the winners”,
which was highlighted recently in the local media (Mickos and Karlsson,
2006).

Opportunity Based Learning

The next step is to promote
entrepreneurship through
courses where learning is realized through work with development of
real
companies in parallel with university related education. This could be
described as problem based learning (PBL)
on
entrepreneurship. However, the core of innovation is to search for
opportunities and a possible path forward, rather than digging into
problems,
i.e. Opportunity Based Learning.

The innovation school focuses
on
entrepreneurship that fosters the new market-based business logics,
with
product and system design as key to higher added value (se also Fig. 4
below).
Each entrepreneur is to be supported by at least one of the companies
in the
innovation system and is to be supported by a personal mentor, in
addition to the
formal/informal courses.

The support for the
entrepreneurs is
organised in a Tripe Helix manner; with:

companies that facilitate the
entrepreneur’s entrance into the business system and thathelp to arrange investment
resources in exchange for partial ownership;

societal support for the
innovation system’s activities and their interconnections to societal
development interests such as sustainable forestry;

University involvement in competence
development through research and education.

The innovation school
management is coordinating
the process of acquisition of innovative ideas. Some ideas are entered
by
potential entrepreneurs in collaboration with companies. The other
entrepreneurial candidates, ideas and companies will be matched so that
each
preliminary selected idea is matched to a potential entrepreneur. From
that
point on, the selected person is the one that has the main
responsibility to
promote the idea and then an innovation school board will make the
selection of
the entrepreneurs that will be admitted and supported. The innovation
school concept
is designed to promote innovative company development projects in
forestry
related businesses and in regional sustainable development in Southern Sweden.

Innovation System
Goal Levels

The evolving ISSF
is designed to function at the
following levels:

1.Enhanced forest system
resilience and
reduction of risk through increased reliance upon biological,
ecological and
cultural diversity;

2.Enhanced market awareness and
appreciation of sustainability oriented investments and through
building upon
the human value of substantial connections to nature;

3.Enhanced regional business
resilience through support of diversity and entrepreneurship;

4.Expanded development of new
material
products and materials with a higher value added;

5.Optimization of the business
system
to enhance the effectiveness and to obtain more revenue from each area
of
forest land/decade in a sustainable manner;

6.Strengthening of a system for
knowledge development and for enhanced ITC utilization for
documentation of
tacit knowledge, actor coordination, indicator establishment and
continual
improvement;

7.Achieve cost reduction by
increasing
system efficiency, e.g. optimization of logistics and energy usage for
drying
of the timber.

‘Sustainable
forestry’ is a relevant concept
at all of these levels. The preservation of biodiversity challenge is
obvious
at level 1. However, actions at all levels will create strong driving
forces
for investment in sustainable forestry as part of sustainable regional
development.

The
ISSF
approach is designed to
promote forest and wood related business developments. This includes
new hard
and soft wood products, as well as architecture, design and wood based
construction materials development, new business solutions that enhance
efficiency and effectiveness. This includes a more sustainable energy
supply
and usage, and use of forests as a basis for e.g. leaf extracts, health
products, production of wine, mushrooms, berriesand many advanced forest-based
chemicals.

Additionally,
nature’s
services provided by forests, such as wildlife habitat, aesthetic
benefits, air
quality improvement, water purification, flood abatement and carbon
dioxide
fixation are essential benefits provided by properly managed forests.
All of
these parameters as well as the beautiful wood-based furniture that can
be
produced from hard-wood can provide value added through elevated human
enjoyment of close relationships to sustainably managed forests as
integral to
sustainable regional development.

In a societal system’s study of
oak, Ek and Johannesson (2005)
highlighted that the recreational
health value has the same magnitude as the timber value and that
forests also
provide several other regional values.

The County
of Östergötland
is rich in oak
and broadleaved tree habitats, both forests and wood-pastures with
scattered
trees. This gives a special character to the landscape; it has high
natural,
cultural and aesthetic values. The oak-rich landscapes have a special
place in
the hearts of the people from Östergötland
and for
many; an oak pasture with grazing animals is the very image of a
healthy,
living countryside. (Ek and Johannesson,
2005)

Ek and Johannesson
suggest a multi-purpose management for making the oaks an even greater
asset
for nature conservation, historical and aesthetic reasons, recreation
and
tourism as well as for the economic potential through forestry and
grazing.

The Southern Sweden Forest-Based
Businesses

The logging and lumber
logistics’ actors in Sweden
have strong business links to the dominant softwood timber industry
actors (Anonymous, 2005). A large
part of the
timber is transformed to pulp for paper or are exported as planks with
a fairly
low added value. The goal with the new business logics is to create a
more
diverse forestry based business system that, in total, generates higher
human
value in concert with sustainable forestry.

The supply chain in a
forestry-based business
system is illustrated in Figure 1. Currently, it is mainly the softwood
flow
that has been industrialised in a market pull perspective. The Southern
Swedish
hardwood business activities have lower quantities and are more tied to
production push material flows. The business tradition has been that,
the supply
of hardwood logs is dependent upon the harvesting activities in the
softwood
forests which also produce hardwood logs in seasons related to the
softwood logging
seasons and ventures. To some extent; this can be rectified by
elucidating the advantage
of market pull and by ICT
for inter­connection along the
supply chain so that the loggers have up to date timber-demand data.

The sawmill companies that have
survived are
more and more customer-oriented in a way that they seek to minimize
stockpiles
and only saw hardwood based upon orders, i.e. they aim for a just in
time flow.
To some extent they still have to saw and store dried timber due to
specific
conditions for hardwood (drying time for oak is for example 90 days from
freshly harvested wood to 8% MC in a drying kiln) and due to the timber
logistics described above.

One actor in ISSF
is the Wernerträ
saw mill that is drying its hard-wood in kilns and working on
production of
higher value added products, as well as in the establishment of market
pull
business logic. ISSF
is promoting enhanced cooperation among the numerous small actors,
aiming for
new market-based business logic for an integrated hard-wood and
soft-wood
forestry system of Southern Sweden.

Figure 1A
forestry based supply chain material flow and business system

The 2005 Winter
Storm
- Gudrun

In January 2005, Southern Sweden was hit by a
storm; that storm-felled 80 million cubic
meters of wood. Approx. 98 percent of this volume consisted of Scots
pine (Pinussylvestris L.) and Norway
spruce (Piceaabies L. Karst.).
Consequently, Southern Sweden’s
volume of sawlogs of
spruce increased from 689
million m3 in 2004 to 2 470 million m3
in 2005. The
average prices fell from 425 SEK/m3
to 266
SEK/m3
(Sawlogs
of spruce, 2006). The storm mainly affected mature forests. Due to the
millions
of fallen trees, blockage of the roads and breaks in the power and
telephone
lines, numerous people and businesses had extensive problems for
several weeks
after the storm.

Traditionally
and until the storm, the forestry and timber based businesses provided
safe and
sound local employment for countryside people. The scale of the storm damage resulted
in extensive employment
of workers from other countries, partly due to their lower salaries. In
the
near future local forestry related employment risks to be low for a
number of
years.This is a
very significant factor
in many regions of Southern Sweden.
The
impacts of the storm resulted in numerous financial and mental
consequences. Many
forest owners lost a large part of their forests, i.e. the result from
their
life’s investment of work and engagement. Both old and young people
were
depressed; consequently there is a risk that their motivation to invest
in
proactive forestry management may deteriorate. However, the problems
with the
after effects of the storm also built a sense of local fellowship. This
can be
utilized as a ‘wake up call,’ to
raise awareness about the need for proactive, system-wide action (National
Board of Forestry, 2006).

The
global development challenges and the unsettled situation mean that
there is a
need and potential for the establishment of a new, sustainable forestry
stewardship system.

Socially beneficial forest management
helps both local
people and society at large to enjoy long term benefits and also
provides
strong incentives to local people to sustain the forest resources and
adhere to
long-term management plans.

Economically viable forest management
means that forest
operations are structured and managed so as to be sufficiently
profitable,
without generating financial profit at the expense of the forest
resources, the
ecosystem or affected communities. The tension between the need to
generate
adequate financial returns and the principles of responsible forest
operations can
be reduced through efforts to market forest products for their best
value.”(FSCMission,
2006)

Although
FSC certification is
becoming widely recognized,
there is a difference between those goals and the way forestry
management is
currently performed.

Sustainable Forestry is Gaining
Ground

In a recent textbook on
environmental science Withgott
and Brennan (2006)
stated that sustainable forestry is gaining ground. The book’s
perspective is
that “forestry, today must balance the central importance of forests as
ecosystems with civilization’s demand for wood products.” The
concluding remark
in the forest management section is that; “Sustainable forestry is more
costly
for the timber industry, but if certification standards can be kept
adequately
strong then consumer choice in the market place can be a powerful
driver for
good forestry practices for the future”(Withgott and Brennan, 2006). This view is common
in Sweden.

Global Competition

Under current
globalization
processes, markets place severe pressures upon companies to become and
to
continue to be internationally competitive. This often means that they
must
compete with companies that produce their goods and services in
countries where
the workers earn one to two Euros per day. Within this context,
companies seek to
perpetuate their positions of power by outsourcing, succumb to hostile
takeovers, or go bankrupt. In this context, if the total business
system
succeeds in getting the basic resources for very low prices that are
far below
the levels needed to ensure their sustainable management, the basic
human and
natural resources become worthless.

This is a major challenge for sustainable development of
renewable resource
systems like forests. If the trees are perceived as valueless or of
relatively low
value, how shall land-owners and society ‘at-large’
develop and implement the processes and incentives for planting and
managing
forests so that they can obtain a sustainable yield, not only of
timber, but
also of the many other services that a healthy, diverse forest provides?

There is an urgent need for
ecological forest
management expertise. However, the situation may be
inadequate if
certain “experts”, businesses and authorities use the sustainability
argument
to make money and increase their own influence by promoting work with
the
problems that they themselves highlight. This risk applies to projects
that
deal with sustainable forestry, in an analogous way as for pollution
control
technology, as discussed in the following section.

It
is a dilemma that it is easier
to be noticed when one takes action as forming a “fire brigade”. But,
to enable
sustainability there is a need to develop systems to steer clear of
“fires”,
for example to establish types of forestry practices that avoid
devastating effects
from storms. There is a need to promote action to develop front-end
solutions. The
Swedish authorities’ sustainable forestry approaches, thus far, tend to
focus
on legislation for protection of old forests and dead trees, from a
bio-diversity
protection perspective and from a perspective of limiting allowable
harvest.

There
is less public interest in
forestry-based business development and sound cultivation of forests
for the
future. This is analogous to how the heightened consumer awareness of
accumulated
industrial wastes led to regulatory actions to reduce waste, and that
the
resulting increase in costs for regulatory compliance by end-of-pipe
pollution
control approaches tends to constrain profits and that this may
counteract
prospective investment in prevention oriented cleaner production
approaches. (Schley and Laur,
1996) This indicates the complexity in using regulations such
as waste
taxes and nature conservation to promote front-end improvements.
Consequently,
there is a need for life-cycle perspective and innovative, systems
approaches.

From End-of-Pipe Costs to
Transformative Renewal

It
is essential to establish a unifying perspective where
end-of-pipe analyses and traditional environmental science knowledge
are
utilized in concert with other kinds of knowledge to provide insight,
guidance
and drivers to make a transition to more proactive, preventative,
front-end
production, product and system developments. As a term for this
refinement and
transformation of knowledge, Figure 2 uses the term Knowledge
Management.

Figure 2A product life-cycle view
from needs to consequences, with material recycling (at the bottom) and
“immaterial recycling” and learning (the upper side of the figure). One
main aspect
is to clarify how environmental knowledge can be made more useful for
companies
in their proactive sustainable business development.

Figure
2 illustrates a pile of
waste at the use/end-of-pipe location. From that position, one may look
in two
different directions. Firstly, there is an obvious need to decide how
to manage
the waste and about the possible consequences for nature and society,
i.e.
end-of-pipe analyses and waste management developments. Secondly, in a
prevention-oriented,
cleaner production and long-term perspective, it is more important to
consider
why there is so much material that is so problematic and has such low
value,
and how these materials can be reduced through developments in the
preceding life-cycle
steps. This approach to system development will help researchers;
forest
owners, business people and society build systems that are more
effective
throughout the entire consumption and production system by providing
guidance
for front-end and system-wide improvements.

Integration
of Production
and Nature Diversity Interests

The results of the 2005 winter
storm created
new interest in the possibility and necessity of integrating the timber
industry’s production goals and the ecological nature conservation
goals, into
sustainable management of forest and forest product’s systems. While
there is
no clear consensus at this time, in the aftermath of the storm, an
opening
towards concerted proaction
is that those two goals
are now being discussed simultaneously, in the same rooms, at local
meetings. A
reinforcing background interest is that Sweden’s Prime Minister has
decided to
make a serious attempt to cut Sweden’s dependence on fossil-fuel based
crude
oil by 2020 (Statsministernvillstoppaoljeberoendet,
2006).

In Sweden,
forestry or alternative
uses of the land are a major source of renewable energy and
consequently, it is
obvious that there are strong sustainability oriented development
motives to
increase the productive use of forests. Those discussions are building
a
cognitive tension, a creative abrasion (see below) that provides a
driving
force for transformative rethinking for the development of new,
holistic forest
product-service systems.

A transformative process to
achieve sustainable
success is dependent on awareness of the need for change and
internalization
into personal missions to make front-end changes, within the company’s
core
business. (Karlssonet.al., 2004) It takes more than lecturing
on
environmental facts to build such confidence. “The sustainability
challenge
contains a need to rethink, at a level that may be quite frustrating.” (Karlssonet.al.,
2000)
It is not only a question of balancing social, economic and
environmental
concerns, it is also fundamental to think about how humans learn and understand and why people
decide
to do, and to not do various things, (Zadek,
2001), see
also below.

Leaders, Visionary Catalysts and
Consensus Building
for Renewal

To
bring about the transformation
to a more constructive
interaction between proactive
business development and sustainable forestry interests, there
is urgent need for visionary leadership. There is also need for
collaboration
and for persons that are active as change agents. This is essential to
support
transformative change.

Maccoby
(2003)describes
how strong leaders are important in periods of
revolutionary change. There is also a need for readily understandable
framing/systems to catalyze thinking that enable numerous persons to
understand
and to become committed to the core driving forces. Key persons in this
system
can serve as brokers between
different communities of practice (Wenger
1998). For such a system to function optimally,
there
is need for persons that have knowledge about, and acts as brokers between, the companies’ and the
academic cultures. Such a broker
must understand the different ways
of learning, what companies want and how to integrate and build upon
academic rigor
and effective dissemination of knowledge, e.g. about system’s
approaches to
sustainability knowledge. The ISSF system promotes open
dialogue among relevant
stakeholders with the objective of building consensus of vision for
sustainable
forest management as integral to regional sustainability.Additionally, fostering
and supporting
long-term commitment and empowerment to implement the visions are
essential.

The Sun as a Conceptual Framing

In
explaining the development of
his own scientific thinking, the Nobel Prize laureate Feyman,
describes (Feyman, 1999) how his father interacted with
him as a child. In relation to the concept of energy, he illustrated
the basis
for the development of his own way of thinking by describing that when
talking
about how a toy dog moves, his father said that; “It moves because the
sun is
shining”. This resulted in a series of questions from the winding up of
the
spring, through energy in food and ending with the energy from the sun.
This
form of dialogue with children promotes systems thinking. From various pedagogic
perspectives, it is
important for learning to have a conceptual platform of experience to
start
form, a foundation where words and concepts have the same meaning.

It is important to build a
shared understanding
with a foundation in something significant and irrefutable. One way to
explain
new and abstract concepts is to work with storytelling. According
to Brown et.al.(2005), societal integration can be
improved when people “grasp the
innovative potential of knowledge ecologies, where there is creative
abrasion
and the social construction of joint understanding. Countries, regions
and
companies that understand this will flourish; those that don’t are in
for a
hard time.” (Brownet.al.
2005)
The dialogue with the sun as an unchanging
point of reference illustrates a wide and apparently unquestionable
framing
that Fayman’s father
used to create a creative abrasion.

The sun is definitely important
for forests,
and so is biodiversity. But still none of these framings provide direct
conceptual guidance for why the forests are being managed in the way
they currently
are. Zadek (2001)
provides a conceptual reframing that is relevant for such
considerations. He
starts by noting that the conventional wisdom is to show sustainable
development with the environmental, social and economic aspects as
three
interlocking spheres. Secondly, he continues by noting that the human
society
lies wholly within the natural environment and that economy is a tool
that is
used in human societies. Consequently, he shows a literal visualization
where
the economic sphere is a part of the social that in turn lies entirely
within
the environmental. Thirdly, he emphasises that “sustainable development
is an
entirely human, or socialized, conception.” It is humans that
understand or do
not understand, and care or do not care. Consequently, Zadek’s
concluding cognitive visualization of sustainable development shows the
social
as the major, basic sphere that includes a smaller sphere with
environmental,
economic and financial aspects.

The process that controls the
progression of
how most Swedish forests develop has its driving source in something
like Zadek’s cognitive
visualization. To a large extent, the
selection and nurturing of plants is governed by what humans do and do
not do.
Of course, many plants will hardly grow up to anything valuable if
inappropriate choices are made, i.e. if the forest is mismanaged. But
still, it
is human action, or lack of action, that causes different results. The
sun,
climate, soil and husbandry all influence the growth rates of all plant
species. Biodiversity aspects are certainly important. But still, those
fundamental
aspects are interpreted by humans, who understand or do not understand,
and
consciously or unconsciously decide to care or to not care.

Currently, the only factor that
seems to be
considered by most forest based businesses is the short-term economic
profitability. The decisions about forest management are based on
financial
analyses that are often made by experts that are working, more or less
directly, for the established, in Sweden
spruce based, industrial
businesses. Consequently, there is a serious risk that the driving
motivation
comes from the interest to have an abundant supply of timber for the
existing
industries in the short-term and that no or little attention is
directed to
long-term sustainability.

The Use of
Business Science Competence - Sustainable Development

Is
there a basis for sustainable
development work in leading business management theories? Among
environmentalists, the modern business paradigm is often interpreted to
be
totally non-sustainable. For example, the
statement; “The business of
business is business”, made by General Motors, President AlfredT.Sloan,
Jr. in 1923,
has often been interpreted to have a single-minded focus on
(short-term) profit.
However, Sloan’s framing for the statement supports interpretations
such as: “To
be sustainable, what a company has to do is to use the present profit
to
develop new business opportunities.”

More recently, when explaining competitive
advantage; Porter
arguedthat,
“those companies which are able to achieve competitive advantage –
that is, above-average performance in an industry sector – are able to
reinvest
this additional profit into the activities that created the advantage
in the
first place…” (Trott, 2005).
This is a serious message; because, what was it that created the
advantage? It
was not the profit of present activities, but the creation of the
present
business system based upon past profits.
‘The activities that created’ here means the inventions and innovative
development that built the business system.

This implies that business management theory
includes conceptual tools
for transformative renewal. However, there is always a risk that an established
organisation is inclined to
promote continuation with the already established products, businesses
and
habits. It is obvious that incompetent companies have limited ability
to
develop themselves in competitive way. Christensen (1997)
has
highlighted that even very
competent companies try to continue with a linear progression on the
development path that they have invested in, as illustrated by Business as Usual in Figure 3. To achieve
sustainable development, it is necessary to be able to envision new
possibilities to solve old and new problems and to take on the
challenge to change
one’s path of development.

Figure
3 Transformative
developments as a way
to business renewal, to make a turn from the linear path of “business
as usual”
growth, which is bound to hit some serious wall, sooner or later.

It is difficult to make
transformative changes,
also for the very competent. However, itis possible to combine some conceptual framings from
innovative business
management with the renewal oriented sustainable development ambitions.

Design –
Development of
Resources

The value of a resource has
material and non-material bases, related to the knowledge about and
‘value
placed’ on the different kinds of matter. The material aspect has its
primary
foundation in nature, whereas the non-material aspects are humanly
created resource
aspects. The most explicit aim in EcoDesign (Karlsson
and Luttropp, 2006) is to combine the creation of added value
with
reductions of environmental loads and to reduce the consumption of
resources in
such a manner that all can be sustainably produced and consumed. In the
literature,
it is less clear if and how the subject area EcoDesign relates to
beautification of the environment and utility enhancing resource
developments
that improve the sustainability potential for human quality of life.

In
environmental assessments, the
use of raw-material resources is accounted as consumption of resources
from
nature. The resources tend to be perceived as if they have always
existed in
nature, and raw material values are associated with the availability of
concentrates of the needed kinds of atoms. In addition to physical
properties,
the resource values are also dependent on human knowledge about the
respective
kinds of matter.“Resources
are not,
they become” (Gregori, 1987) (Karlsson,
1998), e.g. iron ore became a resource when the Stone Age
people
learned to make use of iron. Consequently, it is possible to further
enhance
the stock of resources. Design could take a clearer role as a driver
for
developments that make more renewable materials more useful as humanly
valuable
resource supplies.

Until
recently, the business
situation of the Swedish timber market is that there has been limited
interest
in hardwood for a number of decades and the Swedish forests have become
dominated by cultivated coniferous softwood species. Many Swedes
consider
hard-wood trees to be more beautiful and sustainable, e.g. for
diversity
reasons. Furthermore, the desire for individual and exclusive wooden
artifacts
could once again become a sound market for a diversity of beautiful and
functional hardwood products, from many species of trees.

Sweden
is one of the places where
hard-wood is a diversified renewable raw material resource.
Simultaneously, the
diversity of trees also contributes to a better biodiversity of other
flora and
fauna, improved quality of air and water quality and more attractive
recreational values. The long-term, material supply capacity and
environmental
qualities are dependent on sustainable forestry.

Design –
Enhancement of
the Value of Forests and of Forest
Products

The design, production and
marketing of attractive hardwood products can catalyze elevated
customer
interest and motivate investments in hard-wood related businesses (See
Fig. 4).
Such customer interests and business capabilities can increase the
value of
hard-wood trees and make them more interesting for forest land owners
to
carefully nurture. In this way, a higher market value for hard-wood
would lead
to a higher future content of hard-wood trees in the forests. Such
market-based
mechanisms can give a stronger promotion for biodiversity development
than when
only working with the conservation approaches thought to ‘protect the
scarce
species’.

Narrowly
focused ‘conservation’
approaches tend to result in economic skepticism against hard-wood
amongst
land-owners because if allowed to grow, these trees may become
interesting
conservation objects that in turn cannot be harvested, even if they are
near to
their natural life’s end. To avoid this, farmers’ invest time and money
in
mono-cultures of coniferous forestry, by eliminating young hardwood
trees.

Figure 4
Customer
preferences for hardwood and Design as initiators for value adding
business
developments and enhancements of hardwood resource values.

Figure
4 has one base in a
market-based perspective, as suggested by (Barabba,
1995); where developments have their main starting point in
the
market pull. In the older production push perspective, the conceptual
starting
point for thoughts about significant developments would usually focus
upon new
technical possibilities and production capacity. In the market of
today, it is
the appraisal of potential customer interests, in certain areas, that
is the
key criterion for decisions about where further business development
investments are made. Barabba
suggests a market-based
approach which integrates serious consideration about where the company
has its
most qualified expertise.

Product design in relation to customer
interests has
always had a development promoting role. Drawings and material
manifestations
have a potential to trigger a clearer communication among the actors in
the
supply chain. EcoDesign ought to promote development of “wider” more
effectual
communication channels, including clearer links to developments of the
resource
stock for the future, as demonstrated by sustainable forestry in Fig.
4. However,
when looking at today’s monetary resource values; a high raw material
price is
often an indicator of scarcity, i.e. a low sustainability potential. Still,
high prices for essential raw materials are a good way to promote
improved
forestry husbandry for sustainable production and consumption.

The hard-wood
trees are an
important constituent of sustainable forestry. ISSFis
designed to
promote development of systematic knowledge about sustainable forestry
and
development of a diversity of hardwood related businesses. This
innovation
approach builds upon product design as key in the “systems thinking”
that
builds a conceptual linkage between value-added hard-wood products and
the
positive valuation of hard-wood trees. This ambition includes value
enhancing
development of the total supply-chain that enables the higher customer
values
through manufacturing, wood, and timber and forestry management. In
this
context, improvement of the market image of wood products includes
remaking a
genuine connection to nature, as well as using the wide assortment of
unique wood
properties for building materials and furniture.

At the customer side; this
product design
perspective is being used to support an increase in the product’s
market
values. In the business system development; the visualization of the
present
and potential customer values for wood is being used as a motivational
factor
for forest owners. One basis for the trustworthiness of this message is
that it
is communicated by companies and persons that are established in and
trusted by
their local communities.

Training for
Transformative Thinking and
Action!!

An
important element in
sustainable development is that there must be a sound and well
supported
process of change, transformation and renewal as well as a readiness
for
quantum jumps. We should not get caught up in recycling but move ahead
to
reusing and rethinking. As McDonough stated in the inspirational film The Next Industrial Revolution we should
not get caught in trying to handle and reduce waste. (The
Next Industrial Revolution, 2001) He suggests that, the level
of ambition ought to be to try to get rid of the concept of “waste.”
Basically,
we should think in terms that all outputs ought to be valuable “food”
for some
other system. We should think so that we can look beyond how the system
presently works. There is a need for mental training to develop the
ability to
rethink what we are doing.

One
aspect of the challenge
associated with the transformation to a more sustainable path of
development is
that the main sustainability considerations have to be described in a
readily
understandable form. Writing is an important tool for comprehension of
what is
going on. “If people know what they think by seeing what they say, then
the
variety, nuance, subtlety, and precision of that saying will affect
what they
see, question, and then pursue.” (Weick,
1995) One
common limitation of pre-industrialized production systems was that
there was
comparatively little refined, written material about the technology and
how the
business systems worked. In recent decades, the Swedish
industrialization and
research on forestry based business has focused on soft-wood, and there
has
been less advanced writing in relation to hard-wood forestry processes.
This
caused a limitation in the present ability to make sense of how
hard-wood
businesses were developed and can be developed in the future.

When
looking at Figure 3 in relation to the
possibility to use analysis and modeling to clarify the need and
advantages of
transformative initiatives, there are several challenges:

Economic bias: The established
soft-wood ‘business as usual,’
system efficiency has been optimized during several decades, whereas
much less investment has been made in hard-wood and bio-energy, which
means that there is a bias in comparisons of economic measures from
optimized and much less developed system aspects.

Status, power and influence: Many
business leaders and experts in the ‘Business
as Usual’ system have status, power, financial resources and
societal influence.

Ability to rethink in concert:
There is limited explicit knowledge about the potential of a more
diversified forest-based business system, which makes it more difficult
to analyze, communicate and judge its business potential.

Points
1 and 2 are difficult
enough, but point 3 poses an even larger obstacle. It is not easy to
conceptualize the possible market-driven relations between the design
side of a
new business system and its multi-stage connections back to forestry
management
and to communicate about the potential business system advantages in a
comprehensible manner.

A Systems View on
ISSF

When
reviewing the Swedish
innovation thinking and ISSF,
in relation to forestry-based
businesses, one fundamental aspect is the selection of perspective
regarding
the need for development. What level of change is essential? What is it
that is
required to achieve sustainable competitive advantage?

The
discussion about the value of
business management theory, e.g. Sloan and Porter, highlights some
leading
business expert’s interest in transformative change. The message about
the
importance of innovation that bridges the differences between different
generations of technology and also between different generations of
market
thinking is severe. At a basic level; it is not a matter of quantity
and
efficiency, rather quality
and
effectiveness. It is a transformative way of thinking that Ackoff
described as
follows:

The measure of a
society’s
economic
growth is the quantity of resources that it makes or helps make
available for
use, that is, the standard of living it provides. In contrast,
development has
to do with how well resources can be used and created in the pursuit of
objectives. It has to do with what one does with what one has. It is
better
reflected in quality of living than in standard of living. It has to do
with
increases in an individual’s or group’s competence, which is a mental
property;
growth has to do with increases in physical properties, quantity. … Development
is a matter of learning, not earning.(Ackoff
and Rovin, 2003)

It is difficult to measure such
qualitative
mental property. This highlights a need to develop a common vision for
a new
innovation system; for this, it may be effective to use descriptive
stories, (Brownet.al.
2005)
and Figure 5. It is not sufficient
to communicate only in terms of analysis and aggregated numbers. There
is a
need to build and connect to human motivation.

To promote engagement in
transformative
developments, we try to use conceptual foundations such as those
presented in, “The pleasure of finding things
out,” (Feyman,
1999) and “The
existential pleasure of engineering.”(Floorman, 1976). When trying to make
transformative
things happen we find interesting aspects in concepts such as Flow(Csikszentmihalyi, 1992), Synchronicity(Jaworski, 1996) and Presence(Sengeet.al. 2004).The story presented in Figure 5
indicates how an earlier local
Swedish author highlighted active, independent creativity.

It
is
Pleasant to be “Present” in a SustainableForest

In addition to the diversity of beautiful products;
sustainable forestry
also contributes to a more multifaceted nature and regional business
development. A landscape element of hard-wood trees improves the
ecological
biodiversity and makes the landscape more living and attractive for
various
recreational purposes and as a place for living. It can be very
pleasant to be
present in and meeting the quilt of beauty of such a natural treasure.
One
cultural element that contributes to the constructive use of systems
thinking
in local dialogues about the human merits of sustainable forestry is
that this
initiative was started in the region that was the home of Astrid
Lindgren (Fig.
5) and Carl von Linné.

Linné
was “a Swedish botanist, physician and zoologist who laid the main
foundation
for the modern scheme of biological nomenclature.” (Carolus Linnaeus, 2006) He is also considered
one of the fathers of modern
ecology and one of the most famous Swedes ever. There are numerous
local Linné activities (Carl
von Linné a knowledge
project, 2006). Linné
improved the basis for sense-making of nature and the
perspective in Lindgren’s stories; see Figure 5, supports
conceptualization of
sustainable entrepreneurship.

Storytelling
and Odd Characters

Astrid
Lindgren “was a Swedish children's book author, whose many books were
translated into over 70 languages and published in more than 100
countries. She
grew up in Småland, Sweden.
Many of her books are based on her family and her childhood on a little
farm.”(Astrid Lindgren, 2006)Lindgren’s
books communicate a love for nature in, the Vimmerby
countryside lifestyle and a love for her characters.

Lindgren's
best-known characters are independent and
unconventional, such as the untidy Pippi Longstocking and Emil with his
pranks.
They broke the tradition where children behaved well, and appealed to
the
little anarchist living inside every child.

One of Lindgren’s
characters is Emil in Lönneberga (Emil on Maple Heights). Emil is a boy who lives on a
farm. He is a good-natured person, however very active and causes a lot
of
nuisance, in particular to his father who often got furious about his
mischief.
Emil is then locked into the farm’s ‘snickarbo’ (carpentry tool-shed).
During
each lock up in the tool-shed, for a mischief, he used the time to
carve a small
wooden figure. Emil was very creative with his carvings and his other
activities.

Emil often
had good motives for his activities and some of his temporarily
frustrating
activities often resulted in very positive long-term effects. For
example, he
wasted money at the market buying seemingly stupid things that later
proved to
be very useful, in other, more important ways, than initially expected.
For
example, a large wooden bread-spade became very useful to calm people
down
during a big fight at the cattle market. At Christmas time Emil
“wasted” all
the food that had been prepared for a fine dinner by inviting all the
poor
people in the village to a party. As an adult, the story says that Emil
became
the chairman of the community board. As a story character, Lindgren’s
Emil is
somewhat similar to the Wernerträ sawmill manger, Egil.

Egil is doing
a number of things that deviate from the traditional business norm. He
stresses
that it is unwise to make paper pulp from furniture quality hardwood
timber,
also when pulping is the most economic use according to the generally
accepted
price structure and logistics. He also argues against the need for
pressure impregnated
wood by emphasising that Oak increasingly is also being used in earth
contact
parts of play-ground equipment. Egil tells stories about how the
quality of
this wood enables long-lasting earth contact utilization without use of
non-natural pesticides. At the value added side, Egil stresses that the
use of
Oak means that, when a child runs a splinter into a finger there is
less reason
for worries. Another product area is that; Wernerträ is working with
moisture
tight consumer packaging for shopping mall sales of pieces of
kiln-dried
handicraft wood, with a moisture content adapted for Swedish indoor
climate
product use. Carpentry with such wood may promote creativity and give
long-lasting outcomes.

A famous person from Småland
that started
with then unconventional wood-based business ideas is Ingvar Kamprad,
the
father of IKEA. There are numerous stories about Kamprad and those are
a part
of the IKEA image.

Tove Karlsson, Egil
Freitag and Reine
Karlsson

Figure 5 Narrative stories as a tool to enhance the
common
understanding as a base for transformative work, i.e. to build bridges
between
different communities of practice.

Linné contributed to a more structured language
for dialogue about the species in nature. Lindgren’s
characters were living
close to natureand
her stories highlighted the importance of engagement.
The nurturing of plants in a sustainable forest may be perceived as a
way to
build a personal monument for the future, while ensuring a sound
economic,
ecological and ethical basis for the short-term and for the long-term.
Some ISSF
actors use
storytelling as a tool to envision the human value of substantial
connections
to nature and to regional sustainable development.

A Basic Challenge
for Transformative
Development

There
is always a need for
experimentation with transformative business developments, in
particular if a
company’s or region’s business development has been following a linear
path of
quantitative development for a long time. From global competitiveness
points of
view it is serious if there is little development in a regional branch
of
industry. It may be even more serious if much money is spent on
developments
that are misperceived to be advanced and prospective, but that in
reality are
tied to a linear track of “business as usual” (Figure 3) without a
truly market-ecosystem-community
based system designed to create new, value added products, services and
sustainable societal values.

Conclusion

There
are great opportunities for
multipurpose use of forests to meet several kinds of highly valued
interests,
through combined use of different kinds of knowledge and management
systems. ISSF
is designed
to support transformative innovations through promotion of further
development
of the forest-based business system to produce higher added value and
to enable
a more sustainable forestry and thus a more sustainable society.

“The next
industrial
revolution 2001”- William McDonough, Michel Braungart
and the Birth of the Sustainable Economy. Film narrated by
Susan
Sarandon and produced by Shelley Morhaim,
http://www.thenextindustrialrevolution.org